Reduce your tax bill by paying into a Pension Plan in Spain

If you live and work in Spain on a permanent nature, you’ll be well aware that the chances of getting a state pension upon retirement are not guaranteed and, even if you’re lucky enough to get one, the amount you’ll get won’t cover champagne breakfasts. So, taking into account that when you do retire you’ll want to have as high an income as possible, checking out Spanish Pension Plans makes sense.

Money Saver Spain spoke with Juan Cavestany who works with GSH (Grupo Santiago Herraiz Seguros) a broker with over 35 years experience in the sector. He told us that if you sign up for a pension plan in Spain before the end of the fiscal year (31 December) it would enable you to take advantage of a considerable saving on your tax bill when the time comes around to file your tax return. This is one of the most interesting features of Spanish Pension Plans and, according to where you live, the tax reduction applied can be in the range of 44% to 49%

When you do retire and start to reap the benefits of your savings in the Pension Plan, as you no longer receive a wage the fiscal impact of the Plan is reduced. The age of retirement in Spain, in line with many other countries, is currently being increased gradually from 65 to 67 years for the majority of people.

And if you’ve been thinking about these products for a while but haven’t got around to it yet, many companies are offering an increase on the amount you put in of between 1% and 1.5% for new pension plans or on transfers from another company plan. Additionally many offer free gifts based on the amount paid into the pension fund that are actually worth having (such as an e-reader).

However, here at MoneySaverSpain we asked whether, given the current volatile economic climate, it makes sense to take out a pension plan with just one company. Juan told us “A single plan won’t allow you to take full advantage of the offers available in the market and exposes you to more risk. In order to get the best return on your money in the long term the best strategy is to have different plans with their corresponding benefits / risks in accordance with each person’s circumstances”. As GSH is a broker, they work with the best products from different insurance companies such as Axa, Mapfre, Allianz, Zurich and HDI and can offer clients products that span from the most conservative to higher risk with everything in-between.

So, even if you’re not a Spanish citizen you can still decide to have a Spanish pension plan as long as you’re a EU member citizen, live or work in Spain for more than 3 months a year, have your NIE number and you’re certain you’re going to retire in Spain.

If you want to contact Juan Cavestany (he speaks English) you can email him onjuan.cavestany@gshseguros.com or phone him 91 563 18 33. Their company slogan is John Ray’s “seeing is believing, but feeling is being sure”. Check out their website.